Question

Herman company has three products in its ending inventory. specific per unit data at the end of the year for each of the products are as follows: product 1 product 2 product 3 cost $ 20 $ 90 $ 50 selling price 40 120 70 costs to sell 6 40 10 required: what unit values should herman use for each of its products when applying the lower of cost or net realizable value (lcnrv) rule to ending inventory?

Answer 1

The inventory values are $20, $90 and $50.

Under the principle of lower of cost or net realizable value, the value of inventory is kept at cost and gain is not recognized until the inventory actually sells. The cost of the products is $20, $90 and $50, which is the inventory value to use.